Background:

The THG (Treibhausgasminderungsquote) quota system is a German government initiative designed to reduce greenhouse gas emissions. Under this system, electric vehicle (EV) owners and other eligible participants can receive payouts for their vehicles because they contribute to lowering carbon emissions. These payouts are funded by companies required to offset their emissions by purchasing certificates, which are generated by EV owners.

The payout per vehicle is not fixed. It depends on market dynamics like supply (number of participating EV owners) and demand (companies buying certificates to meet emission reduction requirements). In recent years, the industry average payout has fluctuated based on these factors.

The calculated amount of CO2 saved depends on the amount of renewable energy in the power grid. As of 2024 652 kg of CO2 savings where awarded.

Historical Price Trends per Ton of CO2

- Pre-2019: THG certificate prices remained relatively stable, ranging between €150 and €200 per tonne of CO₂.

- 2022: With increased obligations for companies to reduce emissions, demand for certificates surged, driving prices up to approximately €475 per tonne of CO₂. This spike resulted in THG premiums for electric vehicle (EV) owners reaching up to €500.

- 2023: The year began with high prices around €430 per tonne of CO₂. However, a consistent decline was observed throughout the year, with prices dropping to €130 per tonne by December. This downward trend was attributed to factors such as increased supply of certificates and market saturation.

- 2024: The downward trend continued, with prices reaching record lows. By November 2024, THG certificate prices had fallen to approximately €90 per tonne of CO₂, marking a significant decrease from the highs observed in 2022.

Factors Influencing Price Fluctuations:

- Market Oversupply: An influx of certificates, partly due to increased biodiesel imports and fraudulent activities, led to an oversupply, exerting downward pressure on prices.

- Regulatory Changes: In November 2024, the German government implemented reforms to prevent oil companies from carrying forward excess emissions reduction credits. This move aimed to stabilize the market and support the biofuel industry, which had been adversely affected by the rapid decline in certificate prices.

- Fraudulent Activities: Instances of fraud, particularly involving upstream emission reduction (UER) projects from countries like China, undermined market integrity and contributed to price volatility.